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O N O ■' .<S 



A Century of Cycles 
In Business 



By 
JOSEPH H. LYNCH 



Copyright, 1911 by the 

Hamilton Publiskingf and Reportmgf Co. 






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* "Ample and accurate information is tke first 
step towards success'. 

J. J. Hill 



PREFACE. 

It is a great desideratum to know when 
good times will commence, and it is also im- 
portant to know how long they will continue, 
and when we may expect the next reaction 
in general business. Believing that human 
affairs move in cycles as certain as the laws 
of nature, and believing in the axiom, **His- 
tory repeats itself," and that statistics con- 
firm this belief, and as these cycles in busi- 
ness have been too numerous, regular and 
persistent to allow for a theory of fortuitous 
circumstances, this volume has been written 
in the hope that some light may be thrown 
on the future, in setting forth what has taken 
place in the past. In the belief that the aver- 
age reader prefers not to be confronted with 
a mass of statistics, the volume has been made 
as concise ad possible, and the aim has been 
to group the cycles together with only abso- 
lutely essential data, as a ready reference for 
the busy man who cares to contrast the past 
with the present, and to compare history with 
what is transpiring in the present, that he may 
resolve upon right conclusions, as to how and 
when the cycles will repeat themselves in the 
future, for his guidance, and if in this, it shall 
in any way succeed in aiding in the slightest 
degree, the wish of the author will be grati- 
fied. 

4 



"A CENTURY OF CYCLES 

IN BUSINESS." 

To decipher the handwriting on the wall, 
to foretell the future intelligently, and to se- 
cure ample and accurate information in re- 
gard to supply and demand, production and 
consumption, is the great want that finance 
and commerce are at this time battling with 
and trying to solve. 

Statistics prove that the price of commodi- 
ties and the contraction and expansion of busi- 
ness work in a systematic order, and occur 
in an established succession as certain and 
regular as the laws of nature. All nature is 
found to be the servant of law: spring, sum- 
mer, autumn and winter succeed each other 
in unchangeable regularity, and the recur- 
rences of the various convulsions of nature 
are being determined on scientific principles; 
none of these things happen by chance, but 
all of them according to some law which as 
yet remains unsolved. 

The axiom "History repeats itself" implies 
a cyclical movement in human affairs, and as 
it is a generally accepted opinion that every- 
thing moves in cycles, especially in nature, 
from the facts given herein, showing the cy- 
cles between the years of good business, and 
the years of depression and their regular re- 
turn, it is obvious that "History does repeat 
itself" and that human affairs move in cycles 
as certain as the laws of nature. The only 
theory for this that can be advanced is, that 
the business community has a tendency to go 
from one extreme to the other. As a whole, 
it is either contracting business under a belief 
that prices will be lower, or expanding under 
the belief that prices will be higher, bringing 
to pass in unchanging regularity the cycles 
5 



from the point of too much confidence, or over- 
expansion, to the point of hopelessness and 
depression. 

The Iron Trade is the chief and ruling in- 
dustry of this country if not in the world, and 
is accepted as one of the best indicators of 
the general course of the country's activity. 
Iron is the most useful of all metals; in fact, 
the foundation of our civilization and the most 
important factor of progress. As the iron in- 
dustry rises and falls in the scale of prosperity, 
so does the general business of the country. 
Pig iron is the barometer of trade, and the 
periodical downward swings in the price of 
this commodity indicate depression, general 
stagnation and panic, in the same manner and 
as positively, as the sudden falling of the mer- 
cury in the barometer denotes violent changes 
in the atmospheric world. It is on the sta- 
tistics of this commodity and on the periodical 
return of the high and low priced years that 
the business cycles are based, and after care- 
ful consideration it must be confessed that 
they most assuredly have a legitimate bearing 
on the future, and it must also be confessed 
that the cycles have been too numerous, regu- 
lar and persistent to allow for a theory of for- 
tuitous coincidence, which seems to be the 
opinion held by some writers. 

Facts are the data for all just reasoning, the 
primary elements of all real knowledge. 
Knowing that history never fails to repeat 
itself and given the facts of the past, it is not 
necessary to possess the gift of prophecy to 
formulate an infallible rule, which if taken 
at the advance leads to success; and, if taken 
at the decline, leads to bankruptcy and ruin. 

The "Ups and Downs" of prices have refer- 
ence to a series of years as distinguished from 
daily and weekly fluctuations, and it will be 
noticed that the "Ups and Downs" in the 



yearly prices of pig iron in a series of years 
are very noticeable, and while revulsions that 
occur from time to time may have a tempor- 
ary influence to depress prices below their 
natural position, they do not in their effects 
change the general course of prices in their 
cycles. It takes a number of years to com- 
plete an "Up and Down." An "Up" consists 
of a period of years in which the price ad- 
vances from the low point and reaches its 
maximum, and a "Down" of a period of years 
in which the price declines from its maximum 
to the lowest. The advances, it will be found,"^ 
are in the series of two years, four years, three 
years and repeat : the declines are in the series 
of six years, five years, seven years and re- 
peat, making a major cycle of twenty-seven , 
years. It must not be expected that the cycles 
terminate exactly at the end of each specific 
year, as the low prices of a "Down" period 
may extend into a fraction of the first year of 
an "Up" period and vice versa, but in the 
period of time covered by a major cycle of 
twenty-seven years it will be found that they 
equalize each other, and as in nature we find 
that one season may and does extend beyond 
the prescribed limits for a short time. 

It will be noted that the cycles of adversity 
and prosperity alternate inside of every ten 
years, and but few of these prosperous decades 
come to any person in an active business life. 
That these recurrences have taken place is 
not a debatable question, and while the argu- 
ment has arisen, that as this country is young 
and growing that there will gradually be a 
slowing down in both methods and effects, 
nevertheless the fact remains that these cycles 
have occurred in older countries like England 
and France with the same regularity thatj 
they have in the United States, which dis- 
proves the theory that age and seasoning pro- 



duce any appreciable improvement. 

It is useless to wait the greater part of our 
lifetime for the results of our own experience; 
we must act upon what others know. We can- 
not afford to make any mistakes or miss any 
opportunity; therefore, on these periodic de- 
clines it is useless to waste our strength or 
impair our energies. Commercial depressions 
afford the best opportunity for profitable in- 
vestment, and capital invested at the top and 
culmination of a speculative era will be lost 
beyond the hope of recovery. 

* AXIOMS. 

Prices are high when they are above the cost 
of production on a declining market. 

Prices are low when they are below the cost 
of production on an advancing market. 

When the price of an article declines be- 
low cost, production will diminish until de- 
mand increases and prices advance. 

When the price of an article advances above 
cost, production will increase until demand 
ceases and prices decline. 

The cost of production is the wages of 
labor, interest on capital and wear of land and 
machinery. 

When the cost of pig iron is thirty dollars 
per ton, it may be either high or low, and like 
a certain game with cards, the points depend 
upon the trumps that are out. 

If the cost of production is above on a de- 
clining market, then thirty dollars per ton is 
high; if the cost of production is below on an 
advancing market, thirty dollars per ton is 
low. * BENNER. 

Period, 1819—1823. 
Down Cycle — 5 years. 

1819 $39.75 per ton, January. 

1820 „ 35.00 " Average. 

1821 35.00 

8 



1822 „ 35.00 

1823 35.50 " November. 

The data compiled dates from the year 1819, 
and commences with a down cycle of five 
years. In the year 1819 occurred a commercial 
panic which produced a disastrous revulsion 
in trade, and caused the failure of a majority 
of the merchants in the country, and two- 
thirds of the real estate passed from the hands 
of the owners to their creditors. Ruin was 
spread over the land and multitudes of banks 
and individuals were broken. The panic was 
the result of a tremendous contraction of bank 
circulation. The year 1820 was characterized 
by great financial distress throughout the 
country owing to excessive importation and a 
deranged currency. 

During the years 1820, 1821 and 1822, the 
average price of pig iron remained stationary, 
and continued so until the month of Novem- 
ber, 1823, when the price advanced fifty cents 
per ton, marking the end of the depression and 
bringing to a close the down cycle of five 
years. 

Period, 1824—1827. 
Up Cycle — 4 years. 

1824 $37.25 per ton, January. 

1825 46.75 " Average. 

1826 46.50 

1827 47.50 " March. 

The year 1824 ushered in an Up Cycle of 
four years, and the price of pig iron advanced 
from. $35.50 per ton in November, 1823, to 
$37.25 per ton by January, 1824. The protec- 
tive tariff enactments of 1824 were followed 
by a general inflation in all lines of business, 
although the European crisis of 1825 caused 
a diminished demand for American products 
and led to fractionally lower prices in 1826 
and some money stringency. The effect, how- 
ever, was temporary, and prices again ad- 

9 



vanced, reaching the maximum price of $47.50 
in March, 1827, which year ended the Up 
Cycle of four years. 

Period, 1828—1834. 
Down Cycle — 7 years. 

1828 $35.00 per ton January. 

1829 35.00 " Average. 

1830 35.00 '' " 

1831 35.00 " ** 

1832 35.00 

1833 38.50 " " 

1834 28.50 '' December. 

The period from 1828 to 1834 is the second 
Down Cycle of the series, and the price of 
pig iron which had taken the descending 
scale in 1827, by January, 1828, had reached 
the price of $35.00 per ton, marking a Down 
Cycle to continue seven years. The year 1828 
was marked by many failures among the 
manufacturers and trades. In 1833 the tariff 
of twelve dollars and one-half was reduced. 
During the latter part of the year business im- 
proved somewhat and the average price of 
1833 is higher than the five preceding years, 
during which time the price remained passive, 
but by December, 1834, the price had again 
declined to $28.50 per ton, with business in all 
branches of trade depressed, and the aggregate 
duties on all imports collected the lowest 
in many years. 

Period, 1835—1837. 
Up Cycle — 3 years. 

1835 $29.25 per ton January. 

1836 41.50 " Average. 

1837 47.00 '' June. 

In accordance with the cyclical law the per- 
iod from 1835 to 1837 was an Up Cycle and 
the second of the series in accordance there- 
with. Prices again took the ascending scale 
and by January, 1835, had advanced to $29.25 
per ton. Prices continued to advance and the 

10 



Up Cycle continued its sway until the year 
1837, when the price reached the maximum of 
$52.50 per ton in February. In May, 1837, a 
commercial panic swept over the country for 
which there was abundant cause. It will be 
noted the price of pig iron had turned in 
February, three months previous to the panic, 
and therefore the turning point cannot be 
attributed to this cause. There had been rapid 
industrial and commercial growth with a mul- 
titude of enterprises established ahead of 
time. Crops were deficient and breadstuffs 
were imported. The refusal of the govern- 
ment to extend the charter of the United 
States bank caused a radical change in the 
banking business of the country, while the 
withdrawal of public deposits and their lodg- 
ment with State banks had given the founda- 
tion to abnormal speculation, and the ruinous 
fall in prices involved the fortunes of mer- 
chants, and all persons engaged in the trades. 
Period, 1838—1843. 
Down Cycle — 6 years. 

1838 $35.00 per ton January. 

1839 30.00 

1840 32.75 

1841 28.50 

1842 27.75 

1843 25.00 ** August. 

The year 1838 was the beginning of the 
third down cycle, to continue six years. From 
the opening to the close of this cycle the 
price of pig iron continued to decline with 
methodical regularity, and from $35.00 per ton 
in January, 1838, had declined $10.00 per ton, 
to $25.00 in July, 1843. The latter year was a 
remarkable one for the extreme depression in 
prices that prevailed for all staple articles. 
Period, 1844—1845. 
Up Cycle — 2 years. 

1844 $27.00 per ton January. 

11 



1845 _ 32.00 " August. 

Just like nature bringing to pass the dif- 
ferent seasons, an Up Cycle was again due 
in 1844, and the price of pig iron which had 
declined to $25.00 per ton in July, 1843, by 
January, 1844, had advanced to $27.00 per ton, 
reaching the maximum price in May, 1845, of 
$36.50 per ton, which ended the Up Cycle of 
two years, and also marked the culmination of 
a Major Cycle of twenty-seven years from 
1819 to 1845. 

Prices declined five years from 1819 to 1823; 
advanced four years to 1827; declined seven 
years to 1834; advanced three years to 1837; 
declined six years to 1843, and again advanced 
two years to 1845. 

Decline 

1819 ) 

1820 ) 

1821 ) 5 years 



1822 ) 

1823 ) 



1828 ) 

1829 ) 

1830 ) 

1831 ) 7 years 

1832 ) 

1833 ) 

1834 ) 



1838 ) 

1839 ) 

1840 ) 

1841 ) 6 years 



Advance 

1824 ) 

1825 ) 

1826 ) 4 years 

1827 ) 



1835 ) 

1836 ) 3 years 

1837 ) 



12 



1842 ) 

1843 ) 

1844 ) 

1845 ) 2 years 

It will be noted the declines are in the 
series of six years, five years, seven years and 
repeat; the advances are in the series of two 
years, four years, three years and repeat. 
Also, it will be noted that in the Major Cycle 
of twenty-seven years there are nine years of 
advances and eighteen years of declines, mak- 
ing the ratio of declines to advances as two to 
one. 

"Ascertaining the truth and dismissing from 
our minds all prejudice and preconceived opin- 
ions, let us have the wisdom and courage to 
be guided by it." 

WILLIAM McKINLEY. 
Period, 1846^1850. 
Down Cycle — 5 years. 

1846 $28.00 per ton January. 

1847 30.25 " Average. 

1848 26.50 

1849 22.75 

1850 20.00 " July. 

The price of No. 1 pig iron is used from the 
beginning of this Down Cycle of five years, 
the first Down Cycle of the second Major Cy- 
cle, No. 1 pig iron having become standard 
at that time. The year 1846 was the cyclical 
year for the Down Cycle to become operative, 
and from May, 1845, the price declined from 
$36.50 per ton to $28.00 per ton in January, 
1846. On April 24th, 1846, the war with Mexi- 
co was declared and continued until July 4th, 
1848. During this period the influx of gold 
from California also took place. The Down 
Cycle continued until 1850, the lowest price 
being quoted in July of that month. Our war 
with Mexico during 1846, 1847 and 1848, and 
the influx of gold from California did not 

13 



have the effect of changing the direction of 
the price of iron, as it continued after the war 
and after peace was declared. A change for 
the better did not take place until after the 
lowest price of $20.00 per ton was reached in 
July, 1850, which year ended the Down 
Cycle. 

Period, 1851—1854. 
Up Cycle — 4 years. 

1851 $21.50 per ton January. 

1852 22.62 " Average. 

1853 36.12 

1854 38.00 " August. 

The year 1851 ushered in an Up Cycle of 
four years, and the discovery of gold in Cali- 
fornia during the Down Cycle just closed, had 
many important bearings on this period of 
prosperity into which the country entered in 
1851. Hope and courage were instilled into 
the people, land values increased, and a 
stimulus was given to the extension of rail- 
roads to the Pacific coast. Shipping was de- 
veloped, immigration was encouraged, the 
manufacture of mercantile goods was stimu- 
lated, as well as transportation and other pur- 
suits. 

Owing to the rising tide of immigration and 
the general prosperity of all enterprises, rail- 
roads were extended throughout the entire 
country on an unprecedented scale. Every 
branch of domestic business was extensively 
active, and merchants and manufacturers were 
vying with each other to extend credits, and 
to do everything to increase the prosperity 
then in existence. 

By the discovery of gold the wealth of the 
country had been suddenly increased, and 
every inhabitant was either directly or indi- 
rectly helped thereby, and unconsciously felt 
the impulse given both by this suddenly in- 
creased production of gold and a rapid rise in 

14 



prices. This was a great encouragement to 
enterprises of all kinds and an incentive to 
further speculation, as it is natural for people 
to feel when prices are rising they will con- 
tinue to go up. The high price of $38.00 per 
ton was the maximum and was reached in 
August, 1854, ending the Up Cycle of four 
years. 

Period, 1855—1861. 
Down Cycle — 7 years. 

1855 $35.12 per ton January. 

1856 27.12 

1857 26.75 

1858 22.25 

1859 23.37 

1860 22.75 

1861 „ 18.67 " October. 

At the beginning of 1855 the iron trade an- 
ticipated a continuation of the good prices and 
business of the preceding four years, but the 
law of cycles^ ordained otherwise, and the 
price of iron which had reached $38.00 per 
ton in 1854 had declined by January 1st, 1855, 
to $31.12 per ton, and continued to decline to 
the end of the seven year cycle ending in 1861. 
The year 1857 brought forth a commercial 
reaction and financial difficulties, a panic of 
the first magnitude. Railroad building had 
been conducted on a broad scale, and the pro- 
portion of specie held by the banks was very 
small in proportion to the loans and deposits. 
The tariff was reduced in 1857, and owing to 
the deficiency in the revenue in 1858 the gov- 
ernment was compelled to borrow twenty mil- 
lions of dollars. The general direction of busi- 
ness continued downward, reaching a climax 
in the depression of 1861, when in the spring 
of that year the war of the rebellion burst 
upon the country like thunder from a clear 
sky, creating disturbance in all business, and 
producing general consternation and stagna- 

15 



tion in the iron trade. The seven years cover- 
ing the period from 1855 to 1861 were very 
disastrous to the iron trade and prostrated 
more furnaces than any period of declines in 
the history of the country to this date, and can 
well be likened to the seven lean years of 
biblical history. 

Period, 1862—1864. 
Up Cycle — 3 years. 

1862 ,. $20.00 per ton January. 

1863 35.25 

1864 75.25 " September. 

By January, 1862, in accordance with the 
law of cycles the price of iron had advanced 
to $20.00 per ton. Trade improved and was 
very active during the war of the rebellion, 
prices reaching the high water mark in Sep- 
tember, 1864, of $75.25 per ton. In February 
of that year speculation in stocks was wild 
and rampant, and on April 18, a semi-panic 
took place in Wall street. 

Period, 1865—1870. 
Down Cycle — 6 years. 

1865 „ $58.12 per ton January. 

1866 „ 46.87 " Average. 

1867 44.12 

1868 39.25 

1869 _ 40.67 

1870 31.25 ** December. 

Beginning with the year 1865 the Down 
Cycle was in the ascendant, to continue for 
six years. In April, 1865, the war of the rebel- 
lion y^^as brought to a close, and on April 14th, 
President Lincoln was assassinated. The Lon- 
don panic in 1866 was followed by a heavy 
drop in prices on the Stock Exchange here, 
and in February, 1866, it seemed as if every- 
body wanted to borrow money and no one 
was willing to lend. Friday, September 24th, 
1869, was known as the Black Friday gold 
panic, and was due to the operations of a spec- 
ie 



ulative clique of New York operators, the 
members of which created a corner in gold. 
In 1869 the unsettled state of the finances of 
the country, and the uncertainty in regard to 
the action of Congress in relation to the re- 
sumption of specie payments greatly paralyzed 
trade, being one of the most unsatisfactory 
and unprofitable years experienced since 1837. 
Period, 1871—1872. 
Up Cycle — 2 years. 

1871 $34.25 per ton March. 

1872 53.87 '' September. 

During the Up Cycle 1871-1872 the country 
was prosperous as never before, railroad lines 
were being extended in every direction, mark- 
ing the most gigantic railroad expansion the 
world ever beheld, creating an extraordinary 
demand for iron that had no parallel in this 
or any other country. 

The Up Cycle of two years 1871-1872 brings 
to a close the second Major Cycle of the series, 
dating from the year 1819. 

Prices declined five years from 1846 to 1850; 
advanced four years 1851 to 1854; declined 
seven years 1855 to 1861 ; advanced three years 
1862 to 1864; declined six years 1865 to 1870 
and advanced two years 1871 to 1872. 

Decline 
1846 ) 



1847 ) 




1848 ) 5 years 




1849 ) 




1850 ) 






Advance 




1851 ) 




1852 ) 




1853 ) 



4 years 



1854 ) 

1855 ) 

1856 ) 

1857 ) 



17 



1858 ) 7 years 

1859 ) 

1860 ) 

1861 ) 

1862 ) 

1863 ) 3 years 

1864 ) 

1865 ) 

1866 ) 

1867 ) 6 years 

1868 ) 

1869 ) 

1870 ) 

1871 ) 

1872 ) 2 years 
Period, 1873—1877. 

Down Cycle — 5 years. 

1873 $45.17 per ton January. 

1874 30.25 '' Average. 

1875 25.50 

1876 22.25 

1877 18.00 " December. 

The year 1873 was the beginning of the first 
Down Cycle of the series of the third Major 
Cycle, and in the summer of this year it be- 
came evident that the demand for iron was 
decreasing, the railroads were not taking as 
many rails as formerly and pig iron was be- 
ginning to accumulate at the furnaces. On 
September 19th, there burst upon the country 
a commercial as well as a stock exchange 
panic, which was the outcome of an enormous 
conversion of floating into fixed capital, and 
at this time the country was producing ano 
importing more iron than it was consuming. 
Prices continued on the downward course in 
just as a decided manner, as the advance of 
1871 and 1872 was unexpected and bewilder- 
ing, and while there is no question that prices 
would have continued downward had the 
panic not occurred, the panic precipitated a 

18 



more sweeping result. During 1874 the iron 
business did not improve, and at the end of 
the year the iron trade of the country was in 
a condition of greater depression than at any 
time since the panic, and the same condition 
existed throughout all the other industries. 
It was estimated that at least a million of 
skilled workmen and women were out of em- 
ployment because there was no work for them 
to do. At this time fifty-three per cent, of 
the furnaces were out of blast. The excessive 
importation of iron during these two years 
added greatly to the severity of the panic by 
glutting the market with foreign iron and 
closing home furnaces and rolling mills. 

During the year 1877 there was an increased 
demand for iron, but this was neutralized, how- 
ever, by the marked decrease in prices, which 
were too low to be profitable, and more than 
one-half the furnaces and many of the rolling 
mills were idle the whole year; failures and 
suspensions being frequent. The Down Cycle 
came to a close with this year with hardly a 
rift in the dark clouds, and prices for iron 
and steel never so low excepting in colonial 
days. 

Period, 1878—1881. 
Up Cycle — 4 years. 

1878 $18.50 per ton January. 

1879 21.75 " Average. 

1880 28.50 

1881 26.25 

After such a depressing period as the trade 
passed through in the Down Cycle of five 
years from 1873 to 1877, it was some time 
before the effect was entirely offset, and 
while production was greater and business 
more active in 1878 prices did not advance. 
In 1879 the Government resumed specie pay- 
ments, giving an impetus to business, and due 
to this fact prices were temporarily higher 

19 



than the average prices of the succeeding year. 
In this cycle we have an example of the first 
year of an Up Cycle being dominated by the 
after effects of a downward period, and a 
temporary effect causing higher prices in one 
year than in the succeeding year. This cycle 
ended with the year 1881 with the iron in- 
dustries in full force. 

Period, 1882—1888. 
Down Cycle — 7 years. 

1882 $25.75 per ton March. 

1883 22.42 

1884 19.81 

1885 17.99 

1886 „.. 18.71 

1887 20.93 

1888 18.00 

The extraordinary activities of the iron in- 
dustry of the last Up Cycle ceased early in 
1882, which was the commencement of a 
Down Cycle of seven years. The wants of 
the consumers were less urgent, and a reac- 
tion set in, so gradual and tranquil, that not 
only, for some time excited no apprehension, 
but was actually imperceptible to many manu- 
facturers, but prices continued to drop as fore- 
told by the rule of cycles. The year 1884 wit- 
nessed a stock exchange panic, and the failures 
of the Metropolitan and Marine Banks were 
accompanied by a fall in prices. 

The cycle ended in 1888 with iron quoted 
at $18.00 per ton in June, and the iron world 
beset with widespread stagnation. 
Period, 1889—1891. 
Up Cycle — 3 years. 

1889 $18.50 per ton November. 

1890 19.90 

1891 17.75 

The tide turned in 1889 and after the in- 
auguration of President Harrison, business 
men became more confident; however, owing 

20 



to the many idle factories, mills and furnaces, 
the result of the Down Cycle just passed, it 
was some months before the turn in business 
affairs became apparent — the outlook indeed 
was very brilliant. The Baring financial panic 
in London, which occurred in November, 1890, 
the shock of which was felt in all the stock 
markets of the country, blighted the brilliant 
hopes and the higher prices so apparent in 
1890. The Baring panic demonstrated the 
folly of overtrading with borrowed capital, 
and the effects of this financial disturbance, 
lack of sufficient expansion of the currency, 
and the restrictions of the national currency 
laws, hampering the banks from extending ac- 
commodations to legitimate business interests, 
restricted any extraordinary movements in 
trade, and due to this fact the year 1891 was 
a year of reaction in the productive industries 
of not only this, but of almost every other 
country, and the production of manufactured 
goods was seriously interrupted. However, 
being an Up Cycle, there was no general clos- 
ing of manufacturing establishments, and 
hence very few workmen were thrown out of 
employment. As the year wore on the pan- 
icky feeling and the general distrust of the 
future subsided and money could be more 
easily obtained for legitimate business pur- 
poses, but the prosperity of the Up Cycle had 
been blighted, and discouraged the large en- 
terprises of production. Business men were 
conservative and there developed a wide- 
spread conviction that caution and patience 
must be exercised everywhere. It will be seen 
from this cycle ending in 891 that we are 
coming down rapidly from the top. 
Period, 1892—1897. 
Down Cycle — 6 years. 

1892 $17.50 per ton January. 

1893 14.52 

21 



1894 12.66 

1895 13.10 

1896 12.95 

1897 11.75 

1892, the commencement of a Down Cycle of 
six years found production in many many 
manufacturing industries restricted, although 
the large crops of the summer and autumn of 
1891 and the extraordinary European demand 
for the surplus excited hopes for higher prices. 
They were not realized, however, and prices 
continued to sink to lower levels, bringing 
many failures. Thirty-six railroads with 
10,508 miles in operation and $368,000,000 of 
stocks and bonds went into the hands of re- 
ceivers, and this within the year after the 
harvesting of the greatest crops ever grown. 
This cycle witnesseses a parallel which had 
not existed in forty years, which was, that the 
presidency and both branches of congress 
passed into the hands of the democratic party. 
Radical legislation was promised by the demo- 
crats and thoughful business men feared that 
this legislation, if accomplished, would be in- 
jurious to the manufacturing interests of the 
country. 

Europe's need of gold drained the country 
of sixty millions of dollars, and in 1893, the 
repeal of the Silver purchasing law gave busi- 
ness confidence a shock that nearly broke the 
whole country. In this same ye^r another 
panic came upon the country, caused by the 
currency situation, withdrawal of foreign in- 
vestments, and the fear of radical tariff legis- 
lation. In 1894 the country suffered one of 
the most severe droughts known, seriously 
reducing both the wheat and corn crops, and 
cotton touched the lowest price known for a 
generation. The following year in December, 
President Cleveland's ill-starred Venezuela 
message was sent out; the effect was instan- 

22 



taneous and a dread of coming calamity spread 
over the country, and the minds of the peo- 
ple were filled with a feeling of distrust, and 
the dreadful specter of war hovered in the air. 
Credit was broken down and the war scare 
was felt by all. Prices continued to decline, 
and the Down Cycle ended in 1897. 

It will be noted from this cycle that we are 
sinking lower at the bottom. 

Period, 1898—1899. 
Up Cycle — 2 years. 

1898 $12.00 per ton January. 

1899 25.00 *' December. 

An Up Cycle of two years was inaugurated 
with the year 1898, and in this year business 
was larger than in the very best of all past 
years, but the improvement was more in the 
volume of trade than in the rise of prices. 
During 1899 labor troubles were numerous, 
having a tendency to check the progress of 
business. It will be noticed that business re- 
vivals are growing weaker, and that the tides 
of speculation are being held back, and it is 
very evident that there is lacking a sufficient 
amount of money in this country to induce 
great speculation. The banks repeatedly have 
to call in their loans by reason of their ex- 
hausted reserves. Something is fundamentally 
wrong in the financial world which is con- 
stantly operating to hold down prices. 

With the year 1899 comes to a close the 
present century, and finds the world vastly 
different from what it was at the close of the 
last century; steam had not moved a boat or 
car ; electricity had not begun talking or melt- 
ing; steel was known chiefly as good material 
for swords and razors; no oil wells were giv- 
ing light to the world. From 1800 to 1899 
has been the longest step the human race has 
taken on this planet. To the amazing prog- 
ress which has really created a new world this 

23 



country has contributed more than its share. 
Fulton started steamboats on the Hudson; 
Morse made wires talk and Field abolished 
the difference of a week between the old 
world and the new. Titusville started lights 
all over the world, and more gold than all the 
world possessed a century ago has come from 
the mines, not then but now in the United 
States. This country does not quite feed the 
world, but in exporting over 420,000,000 
bushels of wheat and corn in the year just 
closed, the United States gives it more food 
than it could well get along without. There 
is no other land in the world, which does not 
owe something, in one way or another, to this 
new country which had scarcely a being and 
was of no consequence in the affairs of na- 
tions when the century began. 

Of all the wonderful progress of the century 
this country performed its full share and more, 
and it would take too much space to men- 
tion the useful inventions which the world 
owes to Americans of the past century. Amer- 
ica has revolutionized the world. Modern 
facilities have brought the ends of the earth 
together, and in turn have developed well de- 
fined cycles in business and prices governed 
by a law beyond the control of men. 

Prices declined five years from 1873 to 1877; 
advanced four years 1878 to 1881; declined 
seven years 1882 to 1888 ; advanced three years 
1889 to 1891; declined six years 1892 to 1897; 
and advanced two years 1898 to 1899. 

Decline 



1873 ) 




1874 ) 




1875 ) 5 years 




1876 ) 




1877 ) 






Advance 




1878 ) 



24 



1879 ) 4 years 

1880 ) 

1881 ) 

1882 ) 

1883 ) 

1884 ) 

1885 ) 7 years 

1886 ) 

1887 ) 

1888 ) 

1889 ) 

1890 ) 3 years 

1891 ) 

1892 ) 

1893 ) 

1894 ) 6 years 

1895 ) 

1896 ) 

1897 ) 

1898 ) 

1899 ) 2 years 
Period 1900—1904. 

Down Cycle — 5 years. 

1900 $20.00 per ton June 

1901 15.87 

1902 22.19 

1903 19.92 

1904 14.94 " July 

With 1900 the Down Cycle was in the 
ascendant, to remain five years. In the early 
part of the year the good prices of 1899 con- 
tinued, but by June the price had commenced 
to ebb. In this year took place the anthra- 
cite coal strike and the Galveston flood. In 
September, 1901, President McKinley was 
assassinated, and in November the Northern 
Pacific financial panic took place. In June, 
1903, occurred what was known as the "Tight 
Money" panic, and in this same year began 
the agitation for Trust regulation. In 1903, 
however, the iron trade experienced quite a 

25 



boom, owing to the reconstruction of the rail- 
roads, big cars and big locomotives, necessi- 
tating heavier rails, new bridges and new ter- 
minals, also, on account of the steel frame 
buildings. The pace was too rapid to last and 
ended with unexpected severity in the latter 
part of the year, the financial reaction together 
v^ith the labor agitation discouraging all new 
enterprise. The year 1903 was also conspic- 
uous as marking the culmination and collapse 
of the great Trust movements. The Down 
Cycle ended in 1904, the lowest price being 
reached in July. 

Period 1905—1908. 
Up Cycle — 4 years. 

1905 $17.75 per ton January 

1906 20.91 " average 

1907 23.14 

1908 18.75 " February 

The slow recovery which began in the lat- 
ter part of 1904 began to strike a rapid pace 
in 1905, ushering in an Up Cycle of four years 
with a vigorous and active trade revival. 
From the year 1906, the price No. 2 Pig Iron, 
which became standard at this period, is 
taken as the basis. Prices continued to im- 
prove notwithstanding the national and state 
anti-corporation legislation, which had a 
haiinful and injurious effect on capital and 
business. In 1906 the government filed a suit 
against the Standard Oil Co., and in this same 
year the Railway Rate bill was passed. Dur- 
ing the same year there was a strain on the 
capital resources of the world, due to the 
enormous demands for trade and speculation, 
and to the exceedingly rapid rise in prices for 
raw material and labor. There was wild 
speculation by all classes, particularly in land, 
mining shares and stock exchange securities. 
During the middle of the year the capitalists 
of the country entered into stock speculation 

26 



and used most unscrupulously their power 
over company finance to help along their pur- 
pose. The grain harvests in 1906, as a whole, 
were never paralleled. 

In May, 1907, the country passed through 
the throes of an urgent money stringency 
called the ''Silent Panic," and in August com- 
menced what was known as the "Roosevelt 
Panic." The acute money stringency of this 
year caused quite a sudden reduction in the 
working force or running time of factories all 
over the country, though industrial failures 
were very few. The money stringency was 
made more acute by the withdrawal of Eu- 
ropean capital loaned us the previous year; 
the partial v/ithdrawal of the interior markets 
from Wall Street ; the distress of wealthy cap- 
italists who had tied themselves up in the 
speculation of the year previous; unsound 
banking practices, and the insolvency of sev- 
eral large industrial companies and numerous 
banks. 

During 1908 there was spasmodic and irreg- 
ular recovery in trade and the working forces 
were increased to about normal capacity; and 
in this year in spite of the signs of industrial 
depression there was a constant spirit of 
optimism, expressing itself in the formation of 
Prosperity Leagues, but the opportunity had 
ended with 1908, which brought to a close the 
Up Cycle of four years with the Railroads 
abandoning new projects and cutting down 
improvements. 

Period 1909—1915. 
Down Cycle — 7 years. 

1909 $17.75 per ton January 

1910 16.86 " average 

1911 „ 15.75 " to date 

1912 

1913 „ 

1914 „ 

27 



1915 

A seven-year Down Cycle according to the 
cyclical law is in order commencing with 
1909. In the early months of the year the 
demand for iron and steel and the numerous 
products was so contracted that severe price- 
cutting on the part of the so-called independ- 
ent producers took place, and in the month 
of February the whole country was startled 
by the announcement that an "Open Market" 
for iron and steel had been proclaimed. Af- 
ter this announcement pig iron prices imme- 
diately dropped from fifty to seventy-five 
cents per ton. During 1909 there was a rapid 
increase in the cost of the necessities of life, 
affecting food, clothing and rent; there was 
also speculation of great magnitude in stocks, 
and as a result of the tying up of capital in 
speculation, and in the simultaneous specu- 
lation of interior markets in land and prod- 
uce, there was a severe strain in the autumn 
on bank reserves. 

The year 1910 has been far from satisfac- 
tory to the iron trade, and business con- 
tracted steadily from January to December. 
The spirit of enterprise was checked and con- 
fidence was shaken by the renewal of the gov- 
ernment campaign against consolidations. 
Although the production of pig iron reached 
the total of 27,250,000 tons, which was con- 
siderably more than the previous high record, 
nevertheless, this large production does not 
indicate that the iron companies have pros- 
pered. The output has far exceeded consump- 
tive requirements and during the greater part 
of the year the average profit on pig iron has 
amounted to but very little. At the beginning 
of the year furnace operators predicted it 
would be a banner year, but they failed to 
take into consideration the large amount of 
construction of work completed over the last 

28 



few years of the Up Cycle, which naturally 
resulted, as at other periods, in over produc- 
tion and lower prices. Shipments of the 
United States Steel Corporation reached a 
new high level during the year, but the earn- 
ings were some $15,000,000 below those of 
1907, and the unfilled tonnage of this corpora- 
tion has been on the decline during the whole 
year, and at the close amounted to only about 
2,650,000 tons, and the output barely amount- 
ing to fifty-five per cent, of capacity. 

The high cost of living has naturally re- 
sulted in a general demand for higher wages, 
which has borne especially heavy on the rail- 
roads, some of whom announced a proposed 
advance in freight rates, but were prevented 
by an injunction secured by direct interven- 
tion of the government, which had the imme- 
diate effect of stopping the purchase of rail- 
road equipment and supplies. 

The Copper industry suffered from over 
production and 1910 will go down in history 
as one of disappointment to the copper pro- 
ducing interests. Consumption was rather 
large, however, the prices for the metal were 
low and the margin of profit was compara- 
tively small, and the probabilities are that 
there must be a further curtailment in pro- 
duction to prevent an accumulation of surplus 
metal. 

In the coal trade the year has been one of 
small progress. 

Leather conditions during the year were 
exceptionally poor; the volume of sales was 
greatly decreased and prices were low. 

In the dry goods trade, the year was very 
unsatisfactory, particularly in the manufac- 
turing end. Sales were in fair volume, but 
profits were small. 

With the Packing Companies net profits 
were reduced as a result of high prices of sup- 

29 



plies, and profits from the meat part of the 
industry were narrow and fluctuating. 

Stock Exchange sales were small through- 
out the year, and by September dwindled to 
the smallest volume of any month since 1904, 
and in the bond market inactivity was even 
more pronounced. 

The high prices of all commodities, the 
widespread extravagance, the speculation in 
western lands, which may yet have serious 
consequences, have brought about a credit 
situation throughout the country, the real po- 
sition of which was shown in the Comptrol- 
ler's statement regarding the interest received 
from leans by the various classes of banks. 
National banks averaged 7.33 per cent; State 
banks averaged 7.73 per cent, and Trust Co.'s 
averaged 6.66 per cent. A country's money 
market may be serene under such circum- 
stances, but they certainly cannot be called 
easy or promotive of enterprise, and it is ob- 
vious that business has not only been laboring 
under a burden of necessity inspired by devel- 
opments at Washington, but also under costly 
capital. 

The year 1911, the third year of this Down 
Cycle, brings us face to face with the follow- 
ing facts: First and foremost the cost of liv- 
ing has persisted in staying upon a most un- 
healthy and deplorable level, saturating the 
country with public discontent, which was 
clearly shown in the results of the late elec- 
tion in November, 1910. President Taft has 
declared that the tariff will have to be revised 
on the piecemeal system, and it is not so long 
since that the country was asked to believe 
that the best tariff ever enacted had been 
escrolled upon the statute books. The coun- 
try has never been alarmingly prosperous un- 
der tariff revision. 

We are still laboring under a defective 

30 



monetary system, which places this country 
at a disadvantage in handling its share of the 
world's trade. Secretary MacVeagh in his an- 
nual report of the Treasury Department says: 
**Our system can fairly be called a panic-breed- 
ing system, whereas every other great na- 
tional banking and currency system is panic- 
preventing. As long as we continue under 
our present system we are liable to panics 
and the devastations of panics reach repub- 
licans and democrats alike. We have no sys- 
tem of reserves. It concentrates in New York 
what are pretended to be reserves and then 
forces the New York banks to lend and abol- 
ish them. Now, a reserve is necessary to the 
very idea of banking, but our system instead 
of building up a reserve destroys it as fast as 
it inclines to accumulate." 

Another factor having a restraining influ- 
ence is the uncertainty concerning the legal 
status of corporations. If the decisions mod- 
ify the present form of conducting large en- 
terprises, then the whole machinery for per- 
forming the business of the country may be 
violently thrown out of gear with such re- 
sults as no one can or dare predict. 

The action of the Interstate Commerce 
Commission on the new freight schedules 
filed by the railroads is still another factor. 
The probabilities are that a majority of the 
increases will not be granted, in which event a 
readjustment of wages is inevitable, which 
will not be accomplished without resistance 
on the part of the labor organizations. If 
these factors develop, the effect will be con- 
traction in business, continued timidity on the 
part of capital, and involuntary economy on 
the part of corporations and individuals. 

Mr. James J. Hill, to whom the financial 
district frequently looks for forecasts of the 
general business outlook, has expressed the 

31 



belief that there would almost inevitably be 
a want of employment during the year 1911; 
he states : "We have sown the wind and must 
expect to reap the whirlwind. Those who 
have nothing to sell but their time will be out 
of employment. There will be a shutting 
down of the mines because iron and coal and 
other minerals that go into production of com- 
mercial articles will not be in demand." 

Price cutting in the iron and steel trades 
and the unfilled tonnage orders sinking to 
lower and lower levels are unmistakable indi- 
cations of dwindling business. The latter in 
itself shows that the trend of the times is 
downward, and better times cannot come for 
general business, until the price for iron shows 
that it is in demand in the industries of the 
country. 

A careful analysis of the conditions abroad 
will show the majority of European countries 
in a pessimistic state of mind. 

England has a very much strained political 
situation; the colonies are becoming restless, 
India especially causing much annoyance. 

In France, the increased cost of living is 
looming up as an economic fact; the recent 
floods caused a tremendous loss, greater than 
any of the kind during the past three hundred 
years. As a result of the floods and the con- 
sequent loss, France has been very much dis- 
tressed and naturally so. 

In Germany, which has grown greatly in 
wealth, commerce and power, there is also an 
unsettled state of affairs. Underneath the 
surface the prevailing opinion seems to be, 
that there is a growing revolt amongst the 
people against the heavy taxes which are 
yearly increasing for a great navy and a larger 
army. 

In Russia past conditions remain unchanged, 
and the country is progressing very slowly. 

32 



Norway and Sweden have plans under way 
to increase their standing armies. 

Italy is progressing rapidly, but has its 
clerical troubles. 

Spain succeeded in quelling its revolution, 
but Portugal was not so fortunate and the 
monarchy was overthrown. 

Brazil was threatened by its mutinous navy, 
and our neighbor, Mexico, had an uprising 
which succeeded in overthrowing the govern- 
ment and bringing to an end the rule of Dic- 
tator Diaz. 

The Government has handed down the de- 
cision in the Standard Oil and Tobacco Trust 
cases, and as had been generally supposed the 
decisions were against the Trusts. Whether 
the result will be beneficial to the country 
cannot be foretold at this time, but the opin- 
ion of Associate Justice Harlan, given here- 
with, seems to give the logical outcome. 

In a formal opinion dissenting from the 
judgment of the United States Supreme Court 
in the Standard Oil case. Associate Justice 
John M. Harlan characterizes as "judicial 
legislation" the action of his colleagues in that 
court in writing into the law the qualifying 
words "unreasonable" and "undue" as describ- 
ing restraints upon commerce and attempts 
at monopoly that contravene the Sherman 
anti-trust law. 

"In my judgment," says Justice Harlan, 
"the decree below should have been affirmed 
without qualification." He declares that the 
opinion of the majority of the court as stated 
by the chief justice informs the subsidiary 
companies of the Standard Oil Co. of New 
Jersey in effect "that although the New Jersey 
Corporation being an illegal combination must 
go out of existence, they (the subsidiaries) 
may join in an agreement to restrain com- 
merce among the states if such restraint be 

33 



not undue." 

Justice Harlan's formal dissent is little short 
of sensational. He declares in effect that the 
Standard Oil decision, by over-reaching the 
action of Congress through judicial construc- 
tion, is a "blow at the integrity of our gov- 
ernmental system, and in the end will prove 
most dangerous to all." 

Justice Harlan expresses the conviction 
that the Standard Oil decision, instead of giv- 
ing rest and quiet to the business of the coun- 
try, will throw business into confusion and 
invite litigation. On this point Justice Harlan 
says : "The disposition of the case under con- 
sideration according to the views of the de- 
fendants, will, it is claimed, quiet and give 
rest to *the business of the country.' On the 
contrary, I have a strong conviction that it will 
throw the business of the country into con- 
fusion and invite a widely-extended and haras- 
sing litigation, the injurious effects of which 
will be felt for many years to come. When 
Congress prohibited every contract, combina- 
tion or monopoly in restraint of commerce, it 
prescribed a simple, definite rule that all could 
understand, and could be easily applied to 
everyone wishing to obey the law and not to 
conduct their business in violation of law. 

But now, it is to be feared, we are to have, 
in cases without number, the constantly re- 
curring inquiry— difficult to solve by proof — 
whether the particular contract, combination 
or trust involved in each case is or is not an 
"unreasonable" or "undue" restraint of trade. 

Congress, in effect, said that there should be 
no restraint of trade, in any form, and this 
court solemnly adjudged many years ago that 
Congress meant what it thus said in clear and 
explicit words, and that it could not add to the 
words of the act. But those who condemn 
the action of Congress are now, in effect, in- 

34 



formed that the courts will allow such re- 
straints of interstate commerce as are shown 
not to be "unreasonable" or "undue." 

Justice Harlan quotes the following from 
the words of Chief Justice White as sustain- 
ing the conclusion he quotes above as to the 
limitation upon future commercial activities 
of the subsidiary companies: "It does not 
necessarily follow that because an illegal re- 
straint of trade or an attempt to monopolize 
or a monopolization resulted from the com- 
bination and the transfer of stocks of the sub- 
sidiary corporations to the New Jersey corpor- 
ation, that a like restraint or attempt to mo- 
nopolize or monopolization would necessarily 
arise from agreement between one or more of 
the subsidiary corporations after the transfer 
of the stock by the New Jersey corporation." 

Reviewing the condition of popular senti- 
ment that led to the passage of the Sherman 
anti-trust law, Justice Harlan said: "All who 
recall the condition of the country in 1890 
will remember that there was everywhere, 
among the people generally, a deep feeling of 
unrest. The nation had been rid of human 
slavery — fortunately, as all now feel — but the 
conviction was universal that the country was 
in real danger from another kind of slavery 
sought to be fastened on the American people, 
namely, the slavery that would result from 
aggregations of capital in the hands of a few 
individuals and corporations controlling for 
their own profit and advantage exclusively the 
entire business of the country, including the 
production and sale of the necessaries of life. 

"Such a danger was thought to be then im- 
minent and all felt that it must be met firmly 
and by such statutory regulations as would 
adequately protect the people against oppres- 
sion and wrong. Congress, therefore, took up 
the matter and gave the whole subject the 

35 



fullest consideration. All agreed that the na- 
tional government could not by legislation 
regulate the domestic trade that was carried 
on wholly in the several states, for power to 
regulate such trade remained with, because 
never surrendered by, the states. But under 
authority expressly granted to it by the Con- 
stitution, Congress could regulate commerce 
among the several states and with foreign 
states. Its authority to regulate such com- 
merce was and is paramount, due force being 
given to other provisions of the fundamental 
law devised by the fathers for the safety of the 
government and for the protection and safety 
of the essential rights inhering in life, liberty 
and property, by way of judicial legislation 
and exception not placed there by the law- 
making branch of the government." 

"This," the court said, "as we have seen, we 
cannot and we ought not to do. It thus ap- 
pears that fifteen years ago, when the purpose 
of Congress in passing the anti-trust act was 
fresh in the minds of the courts, lawyers, 
statesmen and the general public, this court 
expressly declined to indulge in judicial legis- 
lation by inserting in the act the word *unrea- 
sonable' or any other word of like import. It 
may be stated here that the country at large 
accepted this view of the act, and the federal 
courts throughout the entire country enforced 
its provision according to the interpretation 
given in the freight association case." 

Justice Harlan then reviewed the next great 
case involving the anti-trust act, the Joint 
Traffic Association case, considering the con- 
ditions under which this case arose. Justice 
Harlan said: 

"But those who were in combinations that 
were illegal did not despair. They at once 
set up the baseless claim that the decision of 
1896 disturbed the 'business interests of the 

36 



country,' and let it be known that they would 
never be content until the rule was established 
that would permit interstate commerce to be 
subjected to reasonable restraint. Finally an 
opportunity came again to raise the same 
question which this court had, upon full con- 
sideration, determined in 1896." 

Repeating that the Supreme Court in that 
case again refused to write the qualifying 
word "unreasonable," into the law. Justice 
Harlan says: "These utterances, taken in 
connection with what was previously said in 
the trans-Missouri freight case, show too 
clearly and affirmatively to admit of doubt that 
this court, many years ago, upon the fullest 
consideration, interpreted the anti-trust act as 
prohibiting and making illegal not only every 
contract or combination, in whatever form, 
which was in restraint of interstate commerce, 
without regard to its reasonableness or un- 
reasonableness, but all monopolies or attempts 
to monopolize, any part of such trade or com- 
merce. 

"Now this court is asked to do that which 
it has distinctly declared it could not and 
would not do, and has now done what it then 
said it could not constitutionally do. It has 
by mere interpretation modified the act of 
Congress and deprived it of practical value as 
a defensive measure against the evils to be 
remedied. On reading the opinion just deliv- 
ered the first inquiry will be, that as the court 
is unanimous in holding that the particular 
things done by the Standard Oil Company and 
its subsidiary companies in this case were 
illegal under the anti-trust act, whether those 
things were in reasonable or unreasonable 
restraint of interstate commerce, why was it 
necessary to make an elaborate argument as 
is done in the opinion to show that according 
to the 'rule of reason' the act as passed by 

37 



Congress should be interpreted as if it con- 
tained the word 'unreasonable' or the word 
*undue.' 

"The only answer which, in frankness, can 
be given to this question is that the court in- 
tends to decide that its deliberate judgment, 
fifteen years ago, to the effect that the act per- 
mitted no restraint whatever of interstate 
commerce, whether reasonable or unreason- 
able, was not in accordance with the "rule of 
reason.' In effect the court says that it will 
now, for the first time, bring the discussion 
under 'the light of reason' and apply the 
'rule of reason' to the question to be decided. 
I have the authority of this court for saying 
that such a course of proceedings on its part 
is 'judicial legislation.' " 

In conclusion Justice Harlan said: "After 
many years of public service at the national 
capital, and after a somewhat close observa- 
tion of the conduct of public affairs, I am com- 
pelled to say that there is abroad in our land 
a most harmful tendency to bring about the 
amending of constitutions and legislative en- 
actments by means alone of judicial construc- 
tion. As a public policy has been declared 
by the legislative department in respect to in- 
terstate commerce, over which Congress has 
entire control under the Constitution, all con- 
cerned must patiently submit to what has been 
lawfully done until the people of the United 
States, the source of all national power, shall, 
in their own time, upon reflection and through 
the legislative department of the government, 
require a change of that policy. 

"There are some who say that it is a part 
of one's liberty to conduct commerce among 
the states without being subject to govern- 
mental authority. But that would not be 
liberty, regulated by law, and liberty which 
cannot be regulated by law is not to be de- 
sired. The supreme law of the land which is 
38 



binding alike upon all — upon presidents, con- 
gresses, the courts and the people — gives to 
Congress, and to Congress alone, authority to 
regulate interstate commerce, and when Con- 
gress forbids any restraint of such commerce 
in any form, all must obey its mandate. To 
over-reach the action of Congress merely by 
judicial construction — that is, by indirection 
— is a blow at the integrity of our governmen- 
tal system, and in the end will prove most 
dangerous to all." — N. Y. Commercial. 

It would seem that before finance and trade 
can start right on another era of sound pros- 
perity, there must be liquidation in commer- 
cial and industrial circles. Conditions in gen- 
eral leave much to be desired, and does not 
offer anything to refute the theory of the law 
of cycles that business will be on the down- 
ward trend, and judging the future by the 
past, and reasoning from what we know, the 
future does not promise great prosperity. 
1911 is the third year in this Down Cycle of 
seven years; therefore, we must have four 
years more of decline after 1911 to fill up the 
cycle of seven years, and no doubt "History 
will repeat itself" here as it has done in other 
cycles heretofore. 

The year 1912 is Presidential year, and with 
part of the republicans banding together and 
forming the "National Progressive League," 
it would seem as though there would be poli- 
tical changes in 1912, and whether or not it 
will be for the country's good only Father 
Time can tell, but as before stated, whatever 
the political situation may develop, better 
times can not come for general business, until 
the price of iron shows that it is in demand 
in the industries of the country. 

In conclusion the following editorial, which 
appeared in the New York Globe, in the issue 
of August 19, 1910, is worthy of repetition, 
and perhaps the reader after a perusal of the 

39 



cycles in business, will find a striking simiia^- 
ity in the advice of one of the country's mjst 
successful men, and what has been set forth 
herein : 

" The Twentieth Century Wizard." 

"A great many people are not half so much 
interested in the kings of finance as they are 
in the wizards of finance. Yesterday Mr. 
John D. Rockefeller spoke almost as a sor- 
cerer — and the people to whom he spoke are 
as much concerned because of his words as a 
Greek might have been by the words of an 
oracle. 

"Mr. Rockefeller was driving his car 
through the country near Cleveland, Ohio. 
Stopping by the road to get a drink, he asked 
of the woman who brought it to him whether 
her husband owned the little farm. 

" *No,' she said, *but we're going to build 
across the road next spring.' 

'* 'Excuse me for giving advice,' put in Mr. 
Rockefeller, 'but you had better wait two 
years before building.' " 

CONCLUSION. 



The subject in tl^.volume is not, and could 
not be, strictly Original; much herein con- 
tained h^s ^ipady been used and presented 
more abl3»5^ others, although the endeavor 
has been ^present the subject in an original 
form. In some cases the language of other 
writers has been freely adopted, perhaps too 
literally, but the idea has been to present, as 
concise as possible, a review that will enable 
the reader to observe the trend of the Busi- 
ness Cycles, and be guided thereby in his fu- 
ture undertakings. 

It would be impossible to enumerate all the 
sources and authorities from which the data 
has been drawn, but to all I freely and grate- 
fully acknowledge my thanks.— The Author. 

40 




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